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A great article in the Wall Street Journal Blog yesterday explains how qualifying for larger loans might get more difficult in the next few months.

Here’s a quick summaryof the article: If Congress doesn’t extend higher mortgage limits (due to expire December 31, 2010) on conventional and FHA loans, mortgage consumers will find it more difficult (or expensive) to qualify for FHA loans and conventional loans over $417,000.

The WSJ blog explains it better:

Two years ago to help resuscitate the housing market, Congress allowed the Federal Housing Administration, Fannie Mae and Freddie Mac to back loans as high as $729,750 in some locales; well above the standard $417,000 limit. Without an extension on these new limits, as today’s WSJ story notes, that $729,750 ceiling would probably fall to $625,500 next year.

But there’s another issue at play here: loan limits in even more counties could fall because of temporary extensions that have allowed the FHA to guarantee larger loans. There’s a national floor for FHA loan limits, which is currently set at $271,050—this is different from the $417,000 floor used for Fannie and Freddie. That isn’t likely to change. There’s also a national ceiling, currently set at $729,750.

Most counties fall somewhere between the floor and the ceiling. That’s because FHA loan limits vary by region and are pegged to local median home prices. Under normal law, those limits are set at 115% of the local median price; under the expanded limits that are currently in effect, the limits are set at 125% of the local median price.

So, if you’re considering an FHA loan, you probably want to get started soon. If you are anywhere near the jumbo conventional loan range and want to qualify for the lowest rates, you probably want to get started soon.

Sounds like a good idea to me.

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